Is ACME Solar Holdings IPO Good or Bad - Detailed Review

One of India's leading independent power producers, ACME Solar Holdings is going public by kicking off its IPO to list its shares in the Indian Stock Market. In this article, we will provide a comprehensive review of ACME IPO. Analyzing its operations, fundamentals, and peer comparisons to help you make a well-informed investment decision.

ACME Solar Holdings IPO: Company Overview

ACME Solar Holdings is one of India's significant renewable energy companies leading among India’s top 10 renewable energy companies in terms of operational efficiency. It was established in 2003 as an energy management solutions provider, later in 2009, it entered into the renewable energy sector. The company offers solar, wind, hybrid, and firm-dispatchable renewable energy (FDRE) projects. Thereby it has built a strong track record by commissioning over 2,700 MW (3,668 MWp) of solar projects by 2024 and diversified its portfolio with hybrid and FDRE solutions.

ACME Solar Holdings caters to both central and state government-backed entities through 25-year power purchase agreements and generates revenue through the sale of electricity. Its projects are spread across key Indian states like Rajasthan, Gujarat, Andra Pradesh, and Madya Pradesh. Additionally, it employs engineering, procurement, and construction (EPC) and maintenance teams to ensure efficient operation.

With an aggregate operational capacity of 1,320 MW (1,802 MWp) in solar projects, the company has both ongoing (solar and wind power projects of 1,500 MW) and awarded (2,380 MW comprising of solar, hybrid, and FDRE) power production projects.

Further, some of the notable off-takers of the company include NHPC, NTPC, SECI, and GUVNL. The Central Government being the major off-taker, the company caters through 58% of its total projects to Rajasthan, following Madya Pradesh and Gujarat.

Being one of the largest independent power producers (IPP), the company has recently acquired projects with a capacity of 2,080 MW including hybrid and FDRE projects.

ACME Solar Holdings IPO: Industry Overview

Renewable sources are clean sources of energy that generate power without pollutants. Solar, wind, small hydro, biomass, and bagasse are some of the key renewable energy sources utilized widely across the globe. 

Recently the installation of renewable energy has seen a surge of fivefold to approximately 191 GW as of March 2024, as compared to the approximately past 10 years which was recorded 63 GW as of March 2012. Grid-connected renewable energy generation capacity in India comprised 43% of the total installed generation base in the country.

India's electricity requirement has risen at a CAGR of approximately 5.0% between Fiscals 2018 and 2024, while power availability rose at approximately 5.1% CAGR on the back of strong capacity additions, both in the generation and transmission segments.

ACME Solar Holdings IPO: Financial Overview 

As we look at the operational performance of the company, The installed capacity of the company has been reduced from the previous year FY23 (1,459 MW) to FY24 (1,320 MW) exhibiting some divestments or strategic change. 

The Average Capacity Utilization Factor (CUF) has increased by 2.66% over 3 years which stood at 21.93% in FY22 and has grown to 24.59% in FY24 showing better efficiency in generating power. Further, the company shows good operational performance by the grid and plant availability with more than 99%.

As we look at the financials, the company's revenues have decreased in FY24 compared to FY22. The revenue generated in FY22 was Rs.1,562.72 Crores has fallen to Rs.1,466.26 Crores in FY24. There has been a slight decrease in the EBITDA and EBITDA margins from FY23 of 90.55% to 82.56% in FY24. However compared to FY22, the company has maintained stable EBITDA margins.

The company shows a significant increase in Profit after tax of Rs.698.22 Crores in FY24 compared to the loss of Rs.3.17 Crores in FY23 and a profit of Rs. 62.01 Crores in FY22. However, investors should be aware that these profits are generated through the sale of Exceptional items of Rs.721.2 Crores. 

The Net debt-to-equity ratio has been reduced to 2.66 in FY24 representing a reduced debt load compared to 3.56 in FY22. The reason behind the reduction in net debt is likely the sale of exceptional items that generated cash and that cash items are excluded in calculating the net debt.

Additionally, the company’s day sales outstanding improved prominently from 228 days in FY22 to 116 days in FY24, indicating better payment collection efficiency.

ACME Solar Holdings IPO: Peer Comparison

Source: RHP of the company

Compared to its peers, ACME is the smallest company in terms of operational capacity, scale, and revenue. Further, the Profit Margin shown in the financials is derived from the sale of exceptional items like assets. 

Although the firm net debt to equity ratio is low compared to other competitors such as Adani Green indicating the company is less leveraged among other competitors, the investors should be aware that individually, the company’s debts are high as we look deeper.

ACME Solar Holdings IPO Details

ACME Solar Holdings IPO Date

ACME IPO is open to subscription from November 06, 2024, to November 08, 2024. The shares will be allocated to investors on November 11, 2024, and the company will be listed in the NSE and BSE on November 13, 2024.

ACME Solar Holdings IPO Issue Price

ACME is offering its shares in the price band of Rs.275 to Rs.289 apiece. If you are bidding for the IPO at the upper price band, you would require an investment of Rs.14,739 per lot (51 shares).

ACME Solar Holdings IPO Size

ACME Solar Holdings Ltd is offering 100,345,022 Shares to its investors, amounting to an aggregate sum of up to Rs.2,900 Crs. Out of these, 82,871,973 shares worth Rs.2,395.00 Crores are offered through a fresh issue, and 17,474,049 shares worth Rs.505 Crores are offered through an offer for sale.

ACME Solar Holdings IPO GMP

Many investors look at the Grey Market Premium (GMP) before applying for the ACME IPO. The GMP gives an idea of market sentiment and can hint at the possible listing price. However, it should be noted that it does not reflect how financially strong ACME is. Thus, it is important to analyze the details of ACME before investing in it.

ACME Solar Holdings IPO Application Link

Open a demat account with Rupeezy today and enjoy a seamless experience when applying for the IPO. With an easy-to-use platform, Rupeezy makes the IPO application process quick and hassle-free. Click on the apply link below to get started.

Apply for ACME Solar Holdings IPO

Is ACME Solar Holdings IPO: IPO Good or Bad?

ACME Solar Holdings IPO Review: ACME's upcoming IPO presents good opportunities for investors seeking to invest in the renewable energy sector. A notable consumer base and few players in this sector may help the company grab a good market share in the future.

Additionally, As one of the leading players in the renewable energy sector, ACME further presents its large-scale ongoing and awarded projects indicating the future outlook for the investors.

However, investors should keep in mind that ACME is the smallest company in terms of scale and operations compared to its competitors and faces tough competition from giants like Adani Green. Further, the company is mainly profitable because of the sale of exceptional items. Thus, the investors are advised to make an informed decision and carefully evaluate the future growth prospects of the ACME before making an investment.

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